Technically Speaking Blog

By Darin Newsom
DTN Senior Analyst

Live Cattle: The August contract closed $2.155 lower at $148.525. Not only did August live cattle close lower, the contract did so after establishing a bearish outside week on its weekly chart. This should strengthen the secondary (intermediate-term) downtrend. However, last week saw the contract test support near $148.125, the 38.2% retracement level of the previous uptrend from $137.975 through the high of $154.40. Given that the carry in the August to October futures spread continues to reflect a relatively bullish commercial outlook, August live cattle could find renewed buying interest between the 38.2% retracement level and the 50% retracement level near $146.20.

Feeder Cattle: The August contract closed $6.175 lower at $217.255 last week. August feeder cattle confirmed recent signals of a secondary (intermediate-term) downtrend, following up the previous week's bearish crossover by stochastics above the overbought level of 80% with a bearish outside week. The contract immediately fell to a test of support near $217.50, the 33% retracement level of the previous uptrend from $196.675 through the high of $227.80. Next support is at the 50% retracement level near $212.25. Given momentum (stochastics) are growing more bearish, a slide back to the 67% retracement level near $207.05 is likely.

Lean hogs: The August contract closed $1.00 lower at $72.825 last week. August lean hogs fell to a new contract low of $71.175 before posting a solid rally into Friday's close. This move could lead to the market turning sideways within last week's trading range (a high of $74.05).

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.63, up 29 cents for the week. Cash corn looks to have reestablished a secondary (intermediate-term) uptrend, easily moving through resistance at its previous 4-week high of $3.46. The NCI.X closed at a test of resistance, with $3.63 marking the 67% retracement level of the previous downtrend from $3.80 through the recent low of $3.29. With weekly stochastics bullish and the major (long-term) trend up, the next upside target for the NCI.X is its December 2014 high of $3.80.

Soybean meal: The July contract closed $18.20 higher at $341.30. The secondary (intermediate-term) trend remains up. However, the contract did fall back a bit from its initial test of resistance at $351.90. This price marks the 50% retracement level of the previous downtrend from $409.30 through the low of $294.40. Given the continued bullish commercial outlook indicated by the market's inverted forward curve, July bean meal should be able to extend its rally to at least a test of the 67% retracement level of $371.00.

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